XRP Outlook Dimmed by Weak Network Metrics and Chart Patterns

XRP has recently experienced an impressive rally, but signs suggest that the momentum might be losing strength. With its network showing signs of cooling down and key chart patterns indicating a potential downswing, XRP’s current trajectory is coming under scrutiny by crypto analysts and investors alike.

Onchain Metrics Reveal Fragile Market Structure

The surge in XRP’s value—over 385% since late 2024—has brought renewed attention to the cryptocurrency. However, data suggests that the bulk of recent buying took place near XRP’s current peak levels, adding risk to its upside potential. Market data indicates that more than 70% of XRP’s realized market capitalization has been accumulated between late 2024 and early 2025. This figure represents the price at which each token last traded and is often used to calculate the average cost basis for the whole market.

This accumulation pattern is concerning because it mirrors similar behavior seen in previous local peaks. Notably, in 2017, XRP saw a heavy concentration of investments near its top of around $3.55, before plunging into a long-term 95% correction. A similar correction occurred in 2021, when a comparable spike in younger coin accumulation preceded an almost 80% drawdown.

As of early 2025, XRP reached a peak close to $3.40, and the recent increase in the realized cap by short-holding age groups may suggest a top-heavy structure once again. These new entrants to the market are typically more reactive to short-term moves, and any price volatility could induce a substantial wave of selling pressure.

Decline in Active Addresses Signals Weakening Demand

Alongside these market cap concerns, XRP’s onchain activity paints a similar cautionary picture. Active addresses—unique wallets interacting with the XRP Ledger—saw a dramatic spike in March 2025. However, that metric has since nosedived, with activity dropping by over 90% from its peak.

This steep decline in usage hints at fading demand. Historically, shrinking onchain activity during a period of rising prices has reliably preceded market tops, including XRP’s heights in 2017 and 2021. While this isn’t a definitive predictor, diminished transactional use frequently implies that holders are no longer leveraging the token for network-based functions, instead reverting to passivity in anticipation of market developments.

Such behavior reduces overall liquidity and can lead to sharper sell-offs if market sentiment flips bearish.

Chart Patterns Suggest Correction Likely

From a technical perspective, XRP’s price movement is offering additional signs of vulnerability. The latest weekly chart shows that XRP is forming a classic falling wedge pattern. Though typically interpreted as a potential bullish reversal structure, XRP’s failure to break out from the upper resistance trendline has led analysts to forecast a pending correction.

As of late May, XRP is trading within this structure and faces the possibility of a drop toward its lower boundary. This level is supported by the 50-week exponential moving average (EMA), which currently aligns near the $1.76 mark. If momentum continues to weaken, XRP could decline roughly 25% from its recent highs to this support zone.

This pattern echoes historical behavior following similar formations, where unsuccessful breakouts have resulted in significant retracements during periods of macro weakness or lackluster demand.

While technical formations do not guarantee market movements, they offer valuable context alongside onchain signals and investor sentiment trends.

Related: Expert Advice: Sell XRP If You’re Confused

XRP’s recent rally has undoubtedly reinvigorated interest, but industry watchers remain cautious. The confluence of top-heavy market activity, plummeting network use, and bearish technical signals suggests that investors should monitor developments closely. As always, those engaging with the cryptocurrency market are encouraged to evaluate their positions carefully and stay informed.